With all the current changes in the health care market, ancillary benefits have been catapulted to being the new core benefit. Ancillary benefits cannot be subsidized or regulated by the government the same way health insurance recently has, which means that these benefits are here to stay and they will not change from year to year. For many years health insurance was the cornerstone of a benefits package and products such as life insurance, long term disability, short term disability, vision and dental were merely the accessories to a benefit package. But these days, with some companies moving to the exchange or choosing to go self-funded, ancillary benefits play a larger and more important role for employee retention. As more and more baby boomers are helping to take care of their elderly parents, benefits such as long term care are becoming more desirable for companies to offer to their employees. Or for a younger female employee looking to have a baby in the next 10 years, the idea of purchasing a short term disability plan is becoming more common.
With ancillary benefits taking a larger role in the benefit offerings of companies, it is important for brokers to understand the differences among plan designs and how they could affect rates. Take for example a short term disability plan with a one day wait on accidents versus an eight day wait. The shorter wait can increase the rates by more than 25 percent. Having orthodontia included in the dental coverage; a vision plan as a true insurance plan or just a reimbursement schedule; these are important factors for each broker to consider when he is sourcing the market for these benefits.
For many brokers, when they are approached by a client to get ancillary benefits quotes for their employees, they will submit the case to one or two carriers with whom they have a good working relationship. However, with a market that is always shifting, the broker may be missing out on great rates offered by a carrier that they have not worked with much in the past, if ever at all. That’s why it is important to look at quote engines that offer quotes from multiple companies and explain the minute details so you, as the broker, are not spending hours comparing quotes.
From a client’s perspective this ensures that they will be offered the best products and the best rates. The client will be happier than ever with his broker, knowing that he took the time to get quotes from so many different carriers. When presenting to a client, the broker has the opportunity to shine and present information with the confidence that they are selling the client the best benefits for his specific needs.
These quoting tools can also be a great tool for a broker that has a unique case or is being asked by a client to get bids on a product about which they do not have a great deal of knowledge. Let’s say a broker usually sells life insurance policies and that is their specialty. Then one day a major client requests vision quotes. Now the broker is scrambling to find the best carriers and trying to get quotes from a company with whom he does not have a point of contact or experience. Rather than having to go back to their client with sub-par products, the broker can use the same tool that he uses to quote life insurance.
If a broker has a client that is only interested in seeing dental quotes, it is just as easy to go ahead and have quotes run on other benefits such as short term or long term disability and have the quotes ready to show a client when they present the dental quotes. With health benefits being less lucrative and more time-consuming, it is imperative that a broker start offering ancillary products.
These benefits can also put extra earnings in a broker’s pocket. Since most rates are guaranteed for two and sometimes three years, it gives brokers a fixed income. Here’s one scenario: a 25 life case—group life, short term disability, long term disability, dental, vision—the average yearly premium is $31,112.88, which gives the broker an average commission of $4,667.00 and over two years equals roughly $9,334 in commissions on one small 25-man case. You can see the potential to earn nice commissions and get locked-in rates—it’s a win-win. Here again, by having the option to quote with multiple different carriers, a broker can see what options to give the client—the best product on top of getting a top commission rate.
So how do you go about finding these multiple carrier quoting tools? There are not many out there. Ask your general agent if they have something to offer, but be sure that by using their tools you are not losing out on commission or potential bonuses. Also keep in mind who is doing the service. Is the general agent going to help with the day-to-day issues that might arise with a group? We all know how important it is to provide good service to our clients when issues arise. It is important to find a quoting tool that allows a broker to quote multiple sources with one submission. This provides a simple solution for the broker and a comprehensive analysis for the client.
